China launches yuan gold fix in bid to gain more influence in metal pricing

China, the world's top gold producer and one of the biggest consumers, launched Tuesday a yuan-denominated gold price fix in an attempt to become a global price-setter for the precious metal.

The gold benchmark launched by the Shanghai Stock Exchange is based on a 1 kilogram-contract and was set at 256.92 yuan. It is set twice a day based on a few minutes of trading by 18 trading members, Bloomberg reports.

Unlike trading on the Shanghai Gold Exchange, which provides a platform for participants in the bourse, the new fix price can be used as a reference for all suppliers and buyers of gold to settle their transactions.

Analysts believe the new fix won’t have an immediate impact on global pricing benchmarks in London and New York.

The 12 fixing members include 10 Chinese banks and two foreign banks – Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank, Bank of Communications, Shanghai Pudong Development Bank, China Minsheng Bank, Industrial Bank, Ping An Bank, Bank of Shanghai, Standard Charted Bank (China) and Australia and New Zealand Bank (China).

The other six companies – China National Gold Group Corp, Shangdong Gold Group, Shanghai Lao Feng Xiang, Chow Tai Fook, Bank of China (Hong Kong) Ltd and MKS (Switzerland) SA – take part in the benchmark as reference price members.

The goal for China is to boost its influence in global commodities and currency markets while trying to make the yuan a viable competitor to the US dollar.

Analysts believe the new fix won’t have an immediate impact on global pricing benchmarks in London and New York, but a fully convertible Chinese yuan is likely to give Beijing more pricing power on the bullion industry.